Fitch rates two property REITs
Fitch Ratings has awarded stable outlooks to two Australian REIT issues in light of their leading positions in the Australian real estate market.
Shopping centre company Scentre Group was rated as A/Stable while commercial property group Mirvac Group was rated as A-/Stable. The companies hold two of the largest REITs in Australia at $54 billion and $11 billion respectively.
Fitch said the high rating reflected the high visibility of future rental income streams, their leading positions in the market and their commitment and flexibility in managing financial structures to levels commensurate with their ratings.
Both firms were able to respond to changing demand trends, Fitch said, which reduced the cyclical valuation volatility of their portfolios and to take advantage of the prime locations of their properties.
However, the ratings agency noted REITs which had exposure to lower grade and regional properties were likely to come under pressure in the future as the property market begins to cool, which would lead to valuation declines.
These types of REITs would be worse-affected than those which had exposure to high quality assets in major domestic cities.
Recommended for you
GQG Partners has completed the acquisition of the minority interests held by Pacific Current Group in three affiliates which will form its new Private Capital Solutions division.
The wealth management firm has unveiled a new fund in partnership with investment specialist Partners Group, describing the investment solution as an “alternative” to traditional alternatives.
Fidante affiliate NovaPort Capital has announced the closure of its small cap and microcap funds, citing expected declining flows.
T. Rowe Price believes Australian growth is successfully managing to shrug off consumer weakness, but the firm’s multi-asset team is not yet positive enough to increase its underweight position.